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A federal judge in San Diego has blocked a solar power company from building a $2 billion, 709-megawatt array of solar dishes in the Imperial Valley, ruling that the government had not consulted enough with an American Indian tribe before approving the project.

The ruling could be the death knell for the project, which was aimed at helping San Diego Gas & Electric meet state requirements for green energy.

In court hearings, Tessera Solar, the company behind the Imperial Valley Solar project, warned that unless it began the project before Dec. 31, it was at risk of losing $600 million in federal stimulus funding. Without that funding, the company warned, the project would likely not go forward.

“This ruling sets back our ability to provide clean, renewable power to Southern California and delays our ability to bring jobs and economic development to a region with the highest unemployment rate in America," Tessera Chief Executive Robert Lukefahr said in a statement. "It is especially troubling given the very lengthy and comprehensive permitting and consultation process that Tessera Solar and the BLM have undertaken to ensure that Imperial Valley Solar would meet or exceed all Federal and State guidelines to minimize impact on the desert land where this is located."

Tessera and a sister company that is making the Stirling dishes to be used in the farm are both owned by NTR, an Irish conglomerate. NTR has warned investors that it is facing financial problems, mostly related to projects in the United States.

Nevertheless, U.S. District Judge Larry Burns imposed a preliminary injunction blocking the project, after finding that it could do irreparable damage to ancient sites of the Quechan, a tribe in Yuma with territory on both sides of the California-Arizona border.

Burns said that he was “sympathetic” to the problems that Tessera and its partners faced, noting that “Imperial Valley Solar has already spent millions of dollars preparing this project and faces financial difficulties if it is held up,” he wrote.

But he added that the Quechan, who claim there are 459 historic sites within the 10-square-mile area of the project, were left out of much of the planning process and had not been given enough information to present their views.

He pinned the blame on the federal Bureau of Land Management, saying it failed to adequately consult with the tribe, as required under federal law.

The judge's ruling means construction can't start unless the lawsuit continues and Tessera and federal officials are able to do the required consultation with the tribe, or satisfy the judge that they've done what's needed.

"We are confident that upon a full consideration of the extensive record of the federal agencies efforts, the Court will understand that the BLM and the DOI fully complied with both the letter and spirit of the environmental laws and will allow the project to proceed," Tessera's Lukefahr said. "We fully expect this to be a short‐term delay while the merits are fully considered.”

Tessera says it is having trouble finding an investor with deep pockets willing to buy into the project, in part because of the legal challenge. It and sister company Stirling Energy Systems, are also in the middle of significant staff changes

The financing issues will overshadow the legal ones, said Michael Shames, who heads UCAN, the Utility Consumers' Action Network. That group has long argued the Tessera project is a "strawman" used by SDG&E to make construction of the Sunrise Powerlink transmission line seem green.

"Tessera will be pronounced DOA long before the legal challenges for the land use are resolved," Shames said.

This litigation will give pause to anybody thinking of stepping into Tessera's shoes and using the land with a different type of technology, said Bill Powers, an engineer who prefers solar panels in urban areas to large desert solar installations.

"The project may be resurrected as something else," he said. "However, any other project will now face the same hurdle as Tessera at the Imperial County project site. Native American concerns were swept aside and the National Historic Preservation Act ... requirements were ignored by the DOI."

SDG&E spokesman Art Larson said the project represents just one of several renewable power contracts that SDG&E is pursuing in and around the Imperial Valley.

"Not counting Imperial Valley Solar, SDG&E has contracts for 500 megawatts of solar and wind in the area," he said, adding that the company is in negotiations for another 600 megawatts.